Thursday, December 20, 2012

It's been a year of "no" in this little corner of the universe -- no postal reform, no big paper merger, no more listing on the RISI Top 50, no major bankruptcies. There was even a double negative: no No Print Day.

The hot topic this year for Dead Tree Edition readers has been retirement: Nine of the 10 most-read stories dealt with efforts (or lack thereof) to downsize the U.S. Postal Service workforce by getting more employees to quit.

Sunday, December 9, 2012

The U.S. Postal Service, at the urging of publishers, is planning to sell magazine subscriptions on its web site and to promote them at post offices.

“The USPS is moving forward on a plan to offer magazine subscriptions for sale on usps.com,” says Idealliance’s summary of the recent Mailers’ Technical Advisory Committee (MTAC), a joint USPS-mailers groups. “Also, the USPS and mailers are developing a plan to have posters in retail sites with QR codes and other ways of linking to magazine subscriptions.”

When the idea originally surfaced at an MTAC meeting early this year, it included selling subscriptions in post office lobbies, as stores including Best Buy do at checkout. But setting up such a program for hundreds or even thousands of publications might not be worth the effort. It will be easier to test the QR-code posters in select locations.

Tuesday, December 4, 2012

At least 23,000 APWU-represented employees have signed up for incentives to leave the U.S. Postal Service, according to Postmaster General Patrick Donahoe.

Donahoe provided that number at a "State of the Postal Service" presentation last week to leaders of the Mailers' Technical Advisory Committee (MTAC), according to notes released yesterday by Idealliance, a trade organization of publishers and their suppliers. Postal officials had predicted that 15,000 to 20,000 of the approximately 115,000 eligible employees would take the buyout, which includes $15,000 and for many the chance to take early retirement.

Full-time employees had until yesterday to accept the buyout or to change their minds if they had already signed up. Part-timers' deadline is Jan. 4.

Donahoe also told the MTAC leaders that USPS is urging the lame-duck session of Congress to take action on postal reform and not start over in 2013, according to the Idealliance summary. The key issues are removing the burden of prefunding retiree health benefits and allowing five-day delivery, he said.

Sunday, December 2, 2012

Although the latest statistics
on North American newsstand sales look gloomy overall, they also show
significant growth for many magazines.

Third-quarter newsstand sales
in the U.S. and Canada totaled 874.2 million, down nearly 8% from a year ago,
according to MagNet.

“Newsweeklies and especially celebrity titles continue
to lead the decline,” the industry
consortium reported. But for non-weeklies, MagNet sees signs of “high newsstand
consumer demand [for] quality publications that are not providing huge
subscription discounts.”

Among major monthly titles
experiencing healthy growth were National
Geographic (23.8%), Shape (9.5%),
and Consumer Reports (7.0%). (Is it
just a coincidence that National Geographic and Consumer Reports have also
invested heavily in their web sites? Maybe digital and print are not enemies
after all.)

Sales for the Top 50
publications, which include most of the celebrity weeklies, were down 8.3%. But
the next 50 actually increased their sales 7.4%. Nearly one-third of the Top
100 enjoyed increases, according to MagNet.

Another favorable trend: Less
waste. Publishers responded to weakening newsstand sales by distributing 64
million fewer copies than they did a year ago, including a 15.7% reduction for
weeklies. But because unit sales did not decline as much as the reduction in
draw, the proportion of newsstand copies that were sold increased by nearly 2
percentage points for the weeklies and nearly 1 percentage point for the
non-weeklies.

Wednesday, November 28, 2012

The majority of voters in a Dead Tree Edition poll predict that more than 20,000 APWU members will accept incentives to quit.

Of the 1,577 votes in the poll that ended tonight, only 16% agreed with a postal executive's recent estimate that 16,000 to 20,000 of the 115,000 eligible employees would accept the buyout package. Nearly 62% of voters predicted a higher number.

But voters also concluded that the "in the range of 35,000" estimate from William Burrus, former APWU president, is too high. Only one-fifth of voters predicted that more than 30,000 members of the Postal Service's largest labor union would call it quits.

The buyout package includes $15,000 and, for many employees, an even more valuable opportunity to take Voluntary Early Retirement.

Dead Tree Edition estimates that, if successful, the buyout program could reduce the Postal Service's compensation costs by more than $1 billion annually. But USPS seems to be doing little to present the buyout package in the best light, for example sending thousands of employees inaccurately low estimates of their retirement benefits.

Ironically, the APWU, which stands to suffer a significant loss of dues income as a result of the buyouts, is doing more than USPS to clear up the confusion about retirement benefits that may dampen response to the offer.

For example, it sent out a bulletin today informing members about the FERS annuity supplement, about which the Postal Service has been mostly silent. And Burrus urged those considering retirement to "take the money and run" because the Postal Service is unlikely to offer them a similar incentive in the future.

Bolstered by election-related mailings, the U.S. Postal Service experienced something unusual in October -- profitability.

USPS released preliminary financial results late yesterday showing net income of $61 million last month, the first month of Fiscal Year 2013, versus a budgeted loss of $244 million and last year's loss of $139 million.

If not for a $467 million charge for prefunded retiree health benefits, the agency's net would have been $528 million -- a profit margin of more than 8% on revenues of $6.03 billion. Those prepayments have been likened to an interest-free loan to the federal treasury that are designed to obscure the true size of the federal budget deficit. (See Congress Hears the Truth About Postal Service Finances.)

The volume of Standard mail -- derided as "junk mail" by critics -- was up 16% over October 2011. Standard class revenue rose only 10%, evidence that the big volume increase was concentrated in the kind of low-priced mass mailings of letters used by political campaigns.

Also helping the bottom line was better productivity: The Postal Service delivered 9% more mail pieces than in October 2011 but needed only 3% more work hours to accomplish that.

Saturday, November 24, 2012

Answer: When a U.S. Postal Service employee compares the retirement annuity the USPS says he will receive to the payments he will actually get. Ignorance of the additional payments has hindered employees from accepting early-retirement incentives that are so crucial to the Postal Service’s cost-cutting efforts.

Consider the case of “Joan”, an APWU member who is eligible for Voluntary Early Retirement (VERA) and a $15,000 incentive to quit as part of a major USPS downsizing effort. In early October, as part of the incentive program, USPS sent her a notice that her retirement annuity would be $16,638 annually.

After factoring in her other potential income sources, Joan at first decided she couldn’t afford to quit her $53,000-per-year job. But fortunately, she dug a little further and talked to experts in the arcane world of USPS retirement benefits.

An additional $13,000
That’s how Joan learned that if she took the VER she would be eligible for an additional “FERS annuity supplement” of $13,020 annually when she turns 56 in a few years, says Don Cheney, who for years has been helping fellow APWU members understand their various retirement benefits.

Thursday, November 15, 2012

Unless a lot of postal workers get cold feet in the next couple of weeks, more employees will accept a $15,000 incentive to quit than postal executives had expected.

About 20,000 APWU-represented employees have already signed up for the buyout, Federal Times quoted Postmaster General Patrick Donahoe as saying today. That's at the top end of the 15,000-to-20,000 expected range the U.S. Postal Service provided last month and then reiterated last week.

Those who have signed up can back out before the Dec. 3 decision deadline, Federal Times' Sean Reilly noted. But it seems unlikely that many who signed up so far in advance would have a change of heart. Among the early sign-ups are some who had decided months or even years ago to leave as soon as a buyout was offered.

Thousands of the approximately 115,000 eligible employees are probably
still digging through the complexities of postal pensions, annuities,
Thrift Savings Plan payouts, tax implications, payments for unused
leave, etc. to decide whether to take the money and run. Thanks to the incomplete information and lack of guidance USPS provides to potential retirees, the more postal workers learn about their various retirement benefits the better retirement usually looks.

So expect the number of employees who take the buyout to exceed 20,000. By Dead Tree Edition's rough calculations, that means the buyout could end up reducing USPS costs by more than $1 billion annually.

A slight majority of voters in a Dead Tree Edition poll so far believe the USPS estimate is too low. As the number of votes reached passed 1,000 this evening, 52% predicted that more than 20,000 would take the buyout. And 20% predicted the number would be above 30,000. Current results, and the chance to cast your own vote, are near the top of the right-hand column.For more information on the buyout offer, see:

Wednesday, November 14, 2012

Offering 115,000 APWU-represented employees $15,000 to quit will clearly be one of the best investments the U.S. Postal Service has ever made.

What's not clear is how big the investment and payback will be. In other words, how many eligible employees will take the buyout? Dead Tree Edition is asking its readers to make their own prediction (the poll is near the top of the right-hand column) on the early-out incentives that could yield $1 billion or more in annual savings.

When it announced the program a month ago, USPS said it expected 15,000 to 20,000 employees to participate.

Former APWU President William Burrus soon countered with his a much higher estimate -- "in the range of 35,000" -- and advised postal workers not to hold out for something better. (See Take the Money and Run, Burrus Tells Postal Workers.) But the Postal Service's chief human resources officer indicated recently that his estimate had hardly changed; it's now 16,000 to 20,000.

Eliminating a position held by a full-time career postal worker probably saves USPS at least $60,000 annually. And a new employee is likely to cost USPS only half of what a veteran career worker does, according to Burrus.

That means that if half of the early retirees are replaced, a total of 15,000 buyouts would save USPS nearly $700 million annually. But if 35,000 take the package, the savings could be nearly $1.6 billion.

Sunday, November 11, 2012

Many readers in the mid-Atlantic region report a new appreciation for print media in the wake of Sandy’s mayhem. Among the observations they passed along are:

The best photos are still created for print media. Iwan Baan rented a helicopter to capture the stunning image that graced the cover of New
York magazine’s post-storm issue. No one goes to those kinds of lengths,
or expense, to produce a photo that will only appear in digital media.

Print works just fine when the power is out.

Print’s battery doesn’t die.

If you own a printed product, you don’t need a wifi connection to access it.

Wednesday, November 7, 2012

The troubled Flats Sequencing System is saving hundreds of millions of dollars annually, according to a U.S. Postal Service claim.

Based on information USPS filed recently in a lawsuit, the agency’s $1.3 billion FSS investment will pay for itself after barely three full years of operation.

“The Postal Service saves approximately $325,408 for each month of operation of each FSS machine,” USPS said in response to a lawsuit filed against it by the key FSS vendor, Northrop Grumman. “This is the monthly amount the Postal Service would have to pay employees to manually sort flats to delivery point sequence if the Postal Service did not use the FSS machine, minus the additional cost of operating the FSS machine.”

FSS was supposed to revolutionize the sorting of difficult-to-handle flat pieces like catalogs, magazines, and large envelopes. Mailers hoped the efficiency gains from automating mail sortation that was done by letter carriers would reduce pressure on the Postal Service to increase postal rates for flat mail, but now they fear that FSS isn't paying off. (See FSS Is Increasing USPS's Costs, Expert Says and FSS Machines Running Far Slower Than Planned.)

Because the 100 FSS machines were deployed an average of 12 months later than required by contract, USPS claims Northrop Grumman owes it $393.7 million for lost savings. USPS is seeking an additional $17 million from Northrop for other alleged breaches of contract, such as a lack of spare parts, error-plagued maintenance handbooks, and failure to honor warranty claims.

Tuesday, October 23, 2012

In celebration of Yes Print Day!, which was originally called National No-Print Day, we offer a collection of Dead Tree Edition articles about the print medium. Here's information about what makes print special, how printing stacks up environmentally against electronic communications, and how to make print greener:

Recent developments in postpress technology underscore the importance of looking beyond price when choosing a printer. After all, when an organization buys printing, it isn't just paying to put ink on paper; it's paying
to have the right message delivered to the right person on time.

The recent Graph Expo 2012 printing-industry trade show included an impressive array of machine-vision systems on binders, stitchers, and other finishing equipment, reports Don Piontek for Printing Impressions.
In the bindery, “vision systems have become more common over the years ... to verify that the correct signature has been loaded into the feeder by the operator,” he notes.

“On co-mailing machines, cameras will verify that the correct mailing address has been applied to the right publication for that recipient.”

To understand the significance of these advances in cameras, processors, and software, let me relate a couple of war stories:

You're screwed
I worked at a publishing company where an advertiser asked about including a personalized insert in magazine copies going to certain VIP subscribers. So I checked with our printer’s customer service rep whether the printer could ensure that, for example, the insert targeted to Dr. Emily Williams went into the copy addressed to Dr. Emily Williams.

Thursday, October 18, 2012

Google News indicates that more than 1,000 articles were published Thursday about Newsweek magazine abandoning print but continuing as the digital Newsweek Global. Still, many questions remain unanswered, including:

Recent Newsweek cover -- and a parody

Will some of the millions of dollars no longer being forked over to the U.S. Postal Service, paper mills, and printers be reinvested in more and better content?

Will Newsweek Global’s covers still inspire hilarious parodies? Or will lack of visibility at airports, grocery stores, and dentists’ offices mean its covers will no longer matter, regardless how hard Tina Brown tries?

What will happen to current subscribers who don’t have internet or computer access or just don’t want a digital publication? Will they get their money back?

How will advertisers respond to Newsweek Global and its lack of ratebase (guaranteed minimum circulation)?

What does this mean for TIME magazine? Will it benefit from its archrival’s loss of visibility, or will it get sucked down the same toilet?

Will Newsweek Global be only a digital magazine – for example, with numbered pages and a regular publication schedule? Or will some subscribers view its content on an unpaginated, paywall-protected web site that is continuously updated?

Is Newsweek truly abandoning print, or will it become a zombie on newsstands like Life and U.S. News & World Report, living on in “bookazines” (special issues)?

Will Newsweek Global survive?

Added thought: It turns out the Mayans weren't quite right: 2012 isn't the end of Time, it's the end of Newsweek. Related articles:

Sunday, October 14, 2012

Confusion reigns among the 115,000 postal workers who received notices in the past few days about a buyout offer. The confusion could limit the number of APWU-represented career employees who accept the U.S. Postal Service’s $15,000 incentive to retire or quit.

”The Postal Service's voluntary early retirement annuity estimates are as bad as before,” says Don Cheney, a long-time critic of the U.S. Postal Service’s communications with its employees regarding retirement benefits.

As usual, the errors tend to understate what employees’ benefits will be upon retirement, says Cheney, an APWU member who for the last nine years has been advising postal workers and writing about errors in retirement estimates the U.S. Postal Service provides its employees.

“I am receiving numerous inquiries about the retirement incentive,” former APWU president Bill Burrus wrote a few days ago. He urged the union’s current leadership to designate a knowledgeable officer or staff member to help members who have questions about the early-out incentive.

“This is an important time in their lives and they are in need of timely answers to their questions,” Burrus wrote. And they won’t get those answers from the Postal Service. As Cheney notes, USPS offers no retirement counseling to employees taking early retirement until after the decision to retire is irrevocable, which postal unions claim is contrary to federal regulations (not to mention common sense).

Wednesday, October 10, 2012

The chances for meaningful postal reform this year are slim if neither political party gets a mandate from Congressional elections – and none if one party wins control of both houses.

That’s the consensus of several postal experts who have spoken or written recently about the status of postal legislation.

“If the Republicans get a majority in the Senate and hold their majority in the House, nothing will happen until 2013,” Jim O’Brien, Vice President, Distribution & Postal Affairs for Time Inc., told a mailers' focus group meeting last week. “If the Democrats hold the Senate majority and the Republicans hold the House, MAYBE something could happen in the lame duck session. If the Dems win the House and Senate, nothing will happen until 2013.”

During the post-election lame-duck session, the House is likely to approve postal legislation “that moves closer to the Senate version,” Ken Garner and Benjamin Cooper predicted a few days ago at the huge GraphExpo trade show for the printing industry.
(If you’re wondering why postal issues are being discussed at a printing event, Garner, President/CEO, Mailing & Fulfillment Service Association, and Cooper, a prominent postal lobbyist, offered this factoid,: “Over one half of all print [in the U.S.] is created for mail distribution.”)

Saturday, October 6, 2012

The U.S. Postal Service's proposal to downsize its workforce with an employee buyout received support Saturday from a long-time adversary.

William Burrus, former president of the agency's largest labor union and long a vocal critic of USPS management, urged fellow APWU members not to hold out for a better offer than the $15,000 incentive announced this week.

"If you intend to retire my advice is to 'take the money and run,' there is zero possibility that the amount will be increased," Burrus wrote in his blog today. "And for those who hope that a similar offer will be made in the future, I suggest that the odds are heavily against another incentive any time soon."

For the Postal Service, the time has never been better to offer clerks, mechanics, drivers and other APWU-represented employees an early-out bonus, the retired labor leader wrote, because "consolidations and service standard changes will make it possible to process a changing mix of mail with fewer employees."

Monday, October 1, 2012

The U.S. Postal Service’s plans to eliminate Saturday delivery and to lower its delivery standards could face a significant legal obstacle, according to the Postal Regulatory Commission.

In its advisory opinion last week on USPS’s plan to close nearly half of its mail-processing centers, the commission seemed to side with witnesses who said reducing service standards could run afoul of the Congressionally-imposed price cap on postal rates.

“Two expert witnesses . . . presented persuasive testimony that a relationship exists between price and quality, and that lowering quality is equivalent to raising the price,” wrote Chairman Ruth Goldway in an addendum to the PRC’s document.

Under USPS’s Network Rationalization plan, “Eighty percent of all First-Class Mail . . . will be delayed by at least one day,” Goldway wrote. “Much of 2-day mail will become 3-day mail. Rural and remote communities that already receive slower delivery may be impacted even further when weekend and holiday delays are factored in.”

Sunday, September 30, 2012

The U.S. Postal Service's plan to reduce its mail-processing network by half has a major flaw, according to a Postal Regulatory Commission opinion released Friday: The plan would tend "to move processing assignments from more productive plants to less productive plants."

"Shifting volume from less productive to more productive plants, without changing operating windows or service standards, would increase productivity by 18 percent, and save $1.3 billion in direct mail processing costs," the ruling says.

That's more than the $968 million USPS projects that its plan will save in mail-processing costs, and the PRC believes that projection is overly optimistic because of questionable assumptions.

Thursday, September 27, 2012

The U.S. Postal Service has been consolidating its mail-processing operations for several years, but it wasn't until I saw a recent postal official's presentation that I realized even more dramatic changes may be ahead.

The USPS's Network Rationalization Plan, opposed by some postal unions and not-in-my-district Congress members, would cut the number of processing centers nearly in half by 2015 -- from 461 this year to 232 in 2015. That's down from 673 in 2006 and 599 in 2009. (See also Has USPS Targeted the Wrong Plants for Closure?.)

As the maps below show, the impact would be especially dramatic in certain regions. Several states -- including Mississippi, Kansas, and Arizona -- would go from having six or more facilities to only one.

Monday, September 24, 2012

There's nothing particularly green about the massive data centers that store the internet's data, The New York Times revealed this past weekend after in-depth investigation. Data centers waste electricity and spew pollutants in a way that "is sharply at odds with its [the information industry's] image of sleek efficiency and environmental friendliness," the lengthy but clearly written "Power, Pollution, and the Internet" says.

"The industry has long argued that computerizing business transactions
and everyday tasks like banking and reading library books has the net
effect of saving energy and resources." But data centers use more electricity than the paper industry, according to the The Times.

Among other highlights of the article:

"Most data centers, by design, consume vast amounts of energy in an incongruously wasteful manner, interviews and documents show. Online companies typically run their facilities at maximum capacity around the clock, whatever the demand."

"The pollution from data centers has increasingly been cited by the authorities for violating clean air regulations, documents show. In Silicon Valley, many data centers appear on the state government’s Toxic Air Contaminant Inventory, a roster of the area’s top stationary diesel polluters."

Data centers use "only 6 percent to 12 percent of the electricity powering their servers to perform computations. The rest was essentially used to keep servers idling and ready in case of a surge in activity that could slow or crash their operations."

Most of the data are created by consumers. "With no sense that data is physical or that storing it uses up space and energy, those consumers have developed the habit of sending huge data files back and forth, like videos and mass e-mails with photo attachments."

Friday, September 21, 2012

The paper market's long-term decline has now spread to the fictional Dunder Mifflin Paper Company: "The Office" had the worst premiere in its nine-year history last night.

The episode had the show's second-lowest audience ever, attracting "just 4.32 million viewers, down 46 percent among 18–49-year-olds from its premiere last year," reports Vulture.com. In other words, the once-hot comedy centered around a dysfunctional paper company (Aren't they all dysfunctional?) is dropping as fast as newsprint demand.

It's not just newsprint that's shaky. A deal to restart the NewPage supercalendered machine in Port Hawkesbury, Nova Scotia fell through today (Sept. 22 update: and then was resurrected); its shaky status means that North America's only world-class, magazine-quality paper machine is in danger of being shipped to another continent or scrapped. And North America's second-largest player in the magazine category (Verso Paper) is at a competitive disadvantage not because it may be on the verge of bankruptcy reorganization but because several competitors have already been through or are in the Chapter 11 debt-cleansing process.

Declining demand means fewer paper machines are needed, but fortunately some of the idled machines are being put to good use. Several that once made copy paper have been converted recently to producing fluff pulp, the main ingredient in diapers.

Here's how to understand the trends: The bad news for pulp and paper companies is that Baby Boomers are reaching senior-citizen status, leaving fewer dinosaurs in the workplace who still print out their emails to read them. The good news is that the aging of the Baby Boom means more people on the continent are incontinent, which is boosting demand for hygiene products that rely on fluff pulp.

Thursday, September 20, 2012

Almost any discussion of paper manufacturing's environmental impact focuses on cutting trees and protecting forests. But five news reports in the past week provide a reminder of other environmental issues surrounding paper making:

An Environmental Protection Agency study of a former paper Montana paper mill found “potentially dangerous levels of dioxins, heavy metals and other hazardous chemicals,” according to the Missoulian. The results could lead to the former Smurfit Stone property becoming a Superfund site, as well as concerns about what would happen if a levee on the property failed.

A trial began this week on charges that a lawyer duped buyers of a New York paper mill by not disclosing it had been declared a Superfund site. (Are you noticing a pattern here?)

International Paper received regulatory approval for an extensive upgrade of the wastewater treatment plant at its Bogalusa, LA mill. A failure of the plant under previous ownership last year caused a discharge of black liquor, an especially nasty and infamous pulp byproduct, killing hundreds of thousands of fish and fouling the Pearl River.

A power outage last week at a Glatfelter mill in Pennsylvania caused the release of 6,000 gallons of pulp and contaminated water into a nearby stream.

Regardless of how it sources its fiber, can a paper company be considered green if it fouls waterways, spews high levels of toxins and greenhouse gases into the air, uses carcinogenic additives, or reveals as little as possible about its environmental impact? No, not when there are competitors using best practices to minimize emissions, operating mills that are nearly carbon neutral, switching to safer materials, and going way beyond what the law requires in reporting their environmental practices and measurements.

"The outpouring of support made me realize that I could not stop," publisher Alan Robinson told Dead Tree Edition today.

The blog came back to life yesterday with an in-depth look at FedEx's latest quarterly earnings report, which noted that the private carrier has become more reliant on the U.S. Postal Service to deliver its parcels. That kind of original, spin-free analysis makes Alan's work so important at a time when everyone has an opinion about USPS (and they're usually shaped by the mainstream media's uninformed reporting or by political half truths).

Friday, September 14, 2012

In messages to his Twitter followers last night, respected postal commentator Alan Robinson announced that he will be shutting down his Courier Express and Postal Observer blog tomorrow.

"Courier Express and Postal Observer will come to end on September 15th as I am not renewing my hosting agreement," he wrote. "Wish everyone who works on #USPS issues well as I am done for now. I have to take care of myself and writing takes too much time."

"I love writing but I cared too much about readers and not myself; I dug a hole worse than usps," he explained to one follower. "I'm also very frustrating watching the USPS constrict itself as that is what can pass Congress; makes no business sense."

It's fitting that his (apparently) last article for the blog shows that "the House is unlikely to tackle any significant legislation before the end of the fiscal year." It's vintage Alan, digging into the dry details of government and using his extensive knowledge and contacts to tell us what it all means.

Also vintage Alan was his Twitter exchange yesterday with Rep. Dennis Ross, an influential Florida Republican, about the battle between the Tampa Bay Rays and Alan's beloved Orioles. Alan managed not to gloat too much when the Orioles pulled out a victory in the 14th inning.

He also advocates for research funds and better education regarding digestive diseases and oral cancer.

Some people consider me a postal expert, but I'm an amateur in comparison with Alan. I will miss his blog and have invited him to write guest articles for Dead Tree Edition if the writing and commenting bug ever hits him again.

Wednesday, September 12, 2012

Only three weeks after Verso Paper’s CEO said acquiring NewPage was the key to its future, Verso announced it no longer wants to buy its rival. Why the sudden change of heart?

In a mid-August interview with The (Memphis) Commercial Appeal, Verso CEO David J. Paterson said that the company’s key strategy is acquiring ailing companies “to get the cost reductions we can't get on our own.” NewPage, which is in Chapter 11 bankruptcy reorganization, is Verso’s only publicly announced target.

But last week Paterson issued a statement saying, “After careful analysis, we believe it is in the best interests of our company and its stakeholders to focus on the many other opportunities for Verso, including internal growth projects and other potential strategic alternatives.”

Verso's new tack is something of a mystery. Chip Dillon, a long-time forestry industry analyst, announced yesterday that his Vertical Research Partners is dropping coverage of Verso because the company’s future is so unclear. He sees “the restructuring of Verso’s debt as inevitable” but is not sure how or when that will happen.

Among the possible reasons that Verso is no longer courting (or stalking) NewPage:

Hard to get: Verso’s latest move may be a negotiating ploy to wrest a better deal out of NewPage.

"These consolidations [would] reduce facility space costs by $817 million and support labor costs by $566 million, but they also come with additional carrier travel costs of $374 million to obtain the net cost reduction of $1 billion.”

“The greatest opportunities for facility consolidation are with the highest-density ZIP Codes where the space per route is high and other
units are nearby,” the report says. That’s in apparent contrast to the Postal Service’s own approach to closing post offices, which critics claim overwhelmingly focuses on sparsely populated rural areas.

The OIG’s elaborate costing model shows that “delivery support” performed by clerks and postmasters is most efficient in offices with at least five carrier routes.

Equivalent to 7,000 employees
“The model predicts a significant potential savings of 13.6 million delivery support labor hours,” the report says. Those labor savings, roughly the equivalent of 7,000 full-time employees, “are associated primarily with the consolidation of labor hours of small office postmasters and clerks at the smaller delivery units.”

Wednesday, September 5, 2012

The U.S. Postal Service recently experimented with “100 Percent Street Time” – assigning some carriers only to prep mail and others only to deliver – then abandoned the project because it didn’t save money. But the concept is not completely dead.

In fact, in a report with the nap-inducing title of City Delivery Route Optimization Pilot Initiative, the USPS Office of Inspector General revealed two weeks ago that the Postal Service canceled a months-long 100 Percent Street Time experiment on June 30.

The OIG agreed with the cancellation because "there is an unfavorable business case for proceeding with the pilot. For the eight sites we reviewed during the pilot, office and street workhours increased with no efficiency improvements."

Workhour savings did not occur
“Area and district officials stated that workhour savings did not occur due to the learning curve for carriers casing multiple routes,” the OIG report said. “In both phases [the first in areas served by Flats Sequencing System machines, the second in non-FSS areas], casers received assistance from deliverers to complete casing duties timely.”

“Our review found an increase in carrier street workhours and overtime, amounting to no savings in both phases of the pilot. Management expected to expand street time by creating full-time street assignments and anticipated more consistent delivery times through reductions in overtime and delivery inconsistencies associated with splitting routes among several carriers in the unit.”

“Management stated that increased workhours and overtime were due to carrier sick leave, increases in office time, errors in Carrier Optimal Route adjustments, vacant routes, and some carriers protesting the concept by deliberately performing less efficiently, and lack of management oversight at the unit level.”

“Carriers filed grievances for out-of-schedule premium pay due to time worked outside of their regularly scheduled workday, which may result in additional pay to these carriers.”

More labor flexibility needed
“There is potential for the pilot concept to achieve significant savings if the Postal Service had more workforce flexibility built into the labor agreement,” citing one district where the experiment saved $611,000 on an annualized basis because of an unusually flexible workforce.

“The Postal Service could maximize workhour savings by using part-time letter carriers for office assignments and full-time carriers for street assignments.”

With that concept, part-time casers would start work at 6 a.m. and spend an average of 3 hours and 15 minutes casing mail for several carrier routes. After that, they might help carriers make deliveries. “Deliverers” would start work between 8:40 and 9 a.m., load up their trucks, and spend an average of 7½ hours making deliveries.

The concept raises some questions, some of which Dead Tree Edition asked back in 2010, such as:

Who can case a route more efficiently, a person who delivers the route regularly or a specialized caser who has never seen the route?

Other than requiring fewer delivery vehicles, how would the concept save money? In other words, how would divvying up the work differently actually change the number of hours required to do the work? (There might be savings from using more part-time carriers, but that doesn't require splitting the roles of caser and deliverer.)

Do postal officials think deliverers on walking routes would be able to handle a full shift on the street without their productivity suffereing? How about on peak-volume days when that “average” of 7 ½ hours might become 10 or more?

How would other USPS operations (such as processing and distribution centers) be affected if mail has to be at the delivery units by 6 a.m.? How would service be affected?

Tuesday, September 4, 2012

News that the U.S. Postal Service’s productivity has taken a turn for the worse comes as no surprise to many USPS employees, especially letter carriers.

Many postal workers responded to last week’s article, USPS Productivity Has Declined This Year, about USPS delivering fewer mail pieces per work hour than it did a year ago. From the comments, on Dead Tree Edition and on other sites, come eight reasons for the USPS’s declining productivity:

Longer hours: “Perhaps if we weren't so short staffed and didn't have endless OT being forced upon us, our productivity would be better,” wrote one of several letter carriers who blamed declining productivity on fatigue caused by longer routes and work days. USPS statistics back up claims from the front line that overtime is increasing among carriers.

More street time: Not only are carriers working longer hours, automation has resulted in them spending more of their day actually delivering mail rather than preparing it for delivery. “I know I am nowhere near as fresh at hour 10 as I am when the day starts after walking in 90 plus heat and full humidity.” Automating the sequencing of mail had been contributing to rising productivity the past few years, but how much of those gains are being lost to burnout? (Which may be why we've heard nothing more about a 2010 USPS proposal to have some carriers making deliveries all day while others prepped mail full time. Aug. 5 update: Oops! USPS recently experimented with the concept, as discussed in Postal Service Trial of '100 Percent Street Time' Fails.)

Flats Sequencing System: And then there’s the issue of what happens when automation doesn’t do what it’s supposed to do. “The billion-dollar wonder flat trashing machines are a nightmare on the street,” wrote one carrier. The huge machines’ erratic performance sometimes result in carriers spending just as much time preparing the mail, or even more, but now have more addresses to serve than in the past because of the expected productivity gains from FSS. Last winter, that led to many carriers delivering mail after dark – definitely not a high-productivity environment.

Shortage of postal clerks: “There are fewer clerks processing mail. It takes longer to get the mail to the carriers, so it takes longer for them to get it to the street,” said one employee. “For every one minute of delay on the workroom floor each morning, you lose (1) x the number of carriers,” noted another. “We have about 60 routes. We've had one clerk excessesd, one moved to the 'Concierge' position, etc. We lose the equivalent of 50-60 man hours nearly every day.”

More delivery points: “Adding millions of delivery points every year will always increase delivery costs,” wrote one commenter, “while increasing volumes (or decreasing volumes) will have little effect on delivery costs because most of the delivery cost (the cost of servicing a delivery point) is fixed while the marginal cost of delivering a mailpiece is darn near negligible in comparison to the fixed cost. In other words, the cost is in having the carrier walk up to the door; whether he is carrying 8 pieces or 3 pieces doesn't affect the cost of making that delivery.”

More parcels: “Parcels definitely take more time” than letters, noted one carrier. The Postal Service’s growing parcel business, coupled with the declining letter business, means fewer mail pieces can be delivered per work hour.

Management: The complaints about USPS having “too many supervisors who supervise the supervision of supervisors” are nothing new. But many employees believe that USPS’s recent downsizing efforts have focused too heavily on unionized employees and not enough on supervisors and administrators who never "touch the mail.”

Wednesday, August 29, 2012

Despite downsizing and other efficiency measures, the U.S. Postal Service’s productivity levels have decreased in the past year.

USPS delivered fewer than 139 mail pieces per work hour in July, a 3.7% decrease from the July 2011 level of 144 pieces, according to preliminary numbers the service released Tuesday. The agency’s net loss for the month was $1.327 billion, nearly $300 million more than planned and more than $500 million worse than last year.

The productivity trend for the full fiscal year (starting October 1) isn’t much better. USPS has delivered 143 pieces per work hour so far in FY2012, down 2.5% from the same 10 months of FY2011.

Mail volume declined more than 4% versus a year ago. But the number of employees has only dropped by about 2%, and they are working more overtime this year.

One key to the lower productivity is delivery costs: Personnel costs for both “city delivery” and “rural delivery” are slightly higher so far this year, despite the drop in mail volume. Delivery costs are more sensitive to the number of delivery points, which are increasing, than to total mail volume.

Many of the Postal Service's proposed efficiency improvements, such as eliminating Saturday delivery and reducing the number of post offices, have been stymied by Congressional inaction.

Tuesday, August 21, 2012

My colleagues in the publishing industry could learn some valuable lessons by observing an unlikely source of publishing wisdom: Moonlighting postal workers. After all, when it comes to web traffic, these “amateur” publishers are kicking a lot of professionals’ butts.

I follow four web sites about postal issues that are published by current or former U.S. Postal Service employees – not the kind of folks we usually consider to be part of the “real” publishing industry. And I follow a variety of web sites covering the magazine, catalog, printing, and paper industries – all produced by publishing professionals and most affiliated with a magazine.

From the data I can glean, the four postal sites -- postalnews.com, PostalReporter.com, Postal Employee Network, and PostalMag.com – typically get at least three to five times more web traffic than any of those professional B2B sites I follow. Postalnews had a recent month with more than 100,000 unique visitors, truly a lofty number for a one-person web site, according to Compete.com. I have my own data as well: Even though most Dead Tree Edition articles are not about postal issues, only Google rivals any of the four as a source of visitors to my blog.

Frankly, they're better than we are
Frankly, part of these amateurs’ success is that they usually do a better job of meeting the needs of their target audience than we “professional” publishers do.

The Web has given such “talented amateurs” the tools to undermine the traditional publishing industry, as I explore in my new article for Publishing Executive magazine, The Seven Habits of Highly Inefficient Publishers. No longer does freedom of the press apply only to those who have access to a printing press.

But these outsiders also show us what publishing can be like without the seven deadly habits that keep us chained to mindsets and business models that no longer work. (One hint: Stop equating “publishing” with “writing articles.” Another: The future of publishing lies not in creating the content people want but in providing them a gateway to the content they want.)

Missed opportunity
There must be a million or more people who work for the U.S. Postal Service, retired from it, or are otherwise intimately involved in it. Why didn’t any mainstream publishers – like maybe the Washington Post or Government Executive -- think of launching a product aimed at this market?

The Post probably couldn’t conceive of running such a business without spending well into six figures for reporters, an editor, etc. The concept of creating such a product primarily by providing links to articles and reports in other media is simply not in the DNA of the Post, or, for that matter, anyone else in the MSM (mainstream-media). Which makes me wonder what other hungry, potentially profitable audiences we’re overlooking because of our hidebound ways.

And for you self-righteous MSMers who complain about aggregators ripping off real publishers, take note: I have seen unique content from this blog rewritten or cited in several daily newspapers and in other name-brand publications without any attribution or link. A noted B2B magazine once took most of a Dead Tree Edition article, rewrote it only slightly, and published it under the byline of one of its own reporters. And When Barry Diller recently talked about the prospect of Newsweek cutting back on print, several major media outlets published quotations that were lifted from SeekingAlpha.com, without attribution rather than from the webcast itself. (Including SeekingAlpha's misquotes gave them away.)

But I have never seen the four postal web sites come close to violating anyone’s copyright or doing anything even remotely unfair (though they occasionally give me a public scolding when they disagree with Dead Tree Edition or spot an error). I can’t imagine any publisher complaining about the brief excerpts that appear on these sites – or about the thousand or more, sometimes many more, visitors that typically follow the link from such excerpts back to the source.

Practicing what I preach
So why don’t I practice what I preach and aggregate content from other sources? In the web ecosystem, some are meant to be aggregators and some to be aggregatees. With a blog that serves multiple interests (publishers, print buyers, printers, postal workers, environmentalists, paper makers, etc.), Dead Tree Edition is better off feeding the aggregators than competing with them.

Tuesday, August 14, 2012

Exactly why House Republican leaders chose not to act on any postal reform legislation before autumn is still a bit of a mystery. But last week’s Dead Tree Edition article on the subject (See 7 Reasons the GOP Might Be Starving USPS of Cash) stirred up plenty of theories and heated comments from all parts of the political spectrum.

Liberals seemed to think I was overly naïve in failing to see the obvious Republican plot to destroy the U.S. Postal Service and let the GOP's cronies loot what’s left. Several conservatives objected to Dead Tree Edition’s supposed liberal bias and questioned why links to this "partisan" article showed up in industry newsletters and LinkedIn groups.

I have a confession to make: Yes, I lean Democratic – whenever I hear Republican politicians yammering. And I start thinking Republican when the Dems start blowing their own hot air. As long as the two parties focus on name calling and sound bites rather than actual solutions, I have no qualms about ridiculing both sides of the aisle.

Anyway, amidst all the vitriol and conspiracy theories, seven additional interesting and sometimes insightful theories emerged to explain the GOP's inaction on the growing postal crisis:

Why bail out Obama?: If a real USPS crisis – like mail not getting delivered or people not getting paid – occurs before the election, who will get blamed? Sure, the thinking goes, House Republicans might take some heat for not bringing any bills to a vote. But the big issue would be the Obama Administration’s failure to provide leadership on a crisis that should have caught no one by surprise.

All pain, no gain: A vote for USPS cost cutting three months before re-election time? Forget about it. Many Congressmen probably had nightmares about their opponents holding media events at closed post offices or being cheered at rallies of laid-off postal workers. They know that those of us who to preserve the Postal Service by enabling it to balance its budget are poorly organized and will have little impact on this fall’s elections.

Friday, August 10, 2012

Shutting down the Sartell, Minnesota paper mill will cost Verso Paper Corp. more than the entire company is worth, Verso revealed yesterday.

The Memorial Day fire and explosion at the mill, which has already cost one employee his life and 265 others their jobs, will result in shutdown costs of approximately $114 million, Verso stated in its quarterly earnings report to the Securities and Exchange Commission. (See excerpt below.) The company’s stock, beaten down by concern about the company’s long-term viability, was worth just over $75 million at the end of the day.

Most of the cost will be for “non-cash” charges to write down the value of Sartell’s plant and equipment. But Verso, North America’s second largest maker of coated paper, estimates it will need cash outlays of about $33 million, most in the current quarter, for severance and other shutdown costs.

“Settlement negotiations regarding this loss claim with our insurance carrier are continuing and we expect resolution in the coming months,” the Verso report said.

Monday, August 6, 2012

Congressional Republicans seem intent on letting the U.S. Postal Service run out of cash, but even the pundits can't figure out exactly why.

The GOP-controlled House left for summer recess last week after failing to vote on two postal-reform bills that have been languishing for months -- a bipartisan Senate measure and a more conservative alternative developed by a Republican-controlled House committee. Republican leaders in the House refused to say why they have failed to bring either bill up for votes, but here are a few of the choicest theories:

Fear: House Speaker John Boehner is perhaps "afraid voters would blame his members for the closing of underused post offices," wrote Gail Collins, an op-ed columnist for The New York Times. "There is nothing Congress cares more about than post offices, 38 of which the House has passed bills to rename over the past 18 months."

Avoiding embarrassment: "Most likely, there's not enough support in the House to pass any bill,
so holding a vote would be an embarrassing setback for the GOP
leadership," speculates Rick Newman of U.S. News & World Report.

Let's get closer to the cliff before we hit the brakes: Citing Republican sources, Bernie Becker of The Hill provided this amazing, and truly disgusting, reason: "Lawmakers don't know exactly when the Postal Service might hit a doomsday date when they wouldn't be able to deliver the mail.” Some Congressmen have criticized USPS for not stating exactly when it will go belly up, he wrote. They want to know whether a real crisis can be avoided in the next few months, which "could give the House even less incentive to bring the bill to the floor before their members face voters in November."

The Mainstream Media Cites Dead Tree Edition

Privacy Policy

Yeah, I'm basically in bed with Google. I use its blogging platform, Gmail service, and a whole lot of other stuff for free. Google has helped many people discover Dead Tree Edition, at no cost to the readers or to me. Virtually all of this blog's measly revenue comes from Google ads; Google splits the revenue with me. I allow Google to use cookies and anonymous identifiers to help it select ads that are relevant to each reader. I'm an old print dinosaur who doesn't understand exactly how this stuff works, but it doesn't involve gathering information that would reveal your actual identity. If you have concerns about any of this, you might want to look into the opt-outs that Google offers.